Local Financial Performance and Its Impact on Border Community Welfare

Abstract

The capability and creativity of financial management conducted by the foremost and outermost local governments should support the orientation of the central government in developing the nation border areas. It needs to be carried out to able to accelerate the development of the areas and to implement regional autonomy policy and fiscal decentralization nowadays. Accordingly, this research aims to discover the local financial performance in Indonesian outermost and foremost areas based on the various calculating indicators. This research also intends to reveal the local financial independence impacts of outermost and foremost areas on their people’s welfare. The analysis results indicate that most of the outermost and foremost local governments in Indonesia possess a very low financial independent ratio. Those areas still prioritize their government expenditure to fulfill the indirect purchase which is not paying attention to develop their areas. Overall, the financial performance of those areas until now does not contribute a real impact on improving the border people’s welfare.